News Column

SCB U-turn on outlook for mortgages

July 30, 2014

By Somruedi Banchongduang, Bangkok Post, Thailand

July 30--New mortgages are forecast to grow by 7.5% this year, a turnaround from an 11% contraction projected previously, amid a second-half economic rebound following the end of crippling political turmoil, says Siam Commercial Bank (SCB).

Pikun Srimahunt, first executive vice-president, said total new housing loans are estimated to expand by 570 billion baht this year compared with a previous forecast of 470 billion.

Lenders extended new mortgages worth 530 billion baht last year.

New housing loans worth 270 billion baht were drawn down during the first six months of this year, with a substantial portion of that in June, a sign consumer confidence is returning.

SCB, the country's largest housing lender, is maintaining its target for mortgage growth at 100 billion baht this year despite the improving economic sentiment, as it wants to concentrate on asset quality rather than loan growth.

The bank plans to keep its housing non-performing loans at 2% of outstanding loans this year.

The cancellation of its zero-rate mortgage campaign is also expected to help control property speculation and maintain asset quality.

Like its industry peers, SCB's new housing loans surged to 13 billion baht last month alone after 7-8 billion a month since the beginning of this year.

The bank's mortgages for the six-month period through June grew by 50 billion baht, Ms Pikun said.

A significant surge in condominium ownership transfers in the second half could be the main driver for overall mortgage growth.

Some 63,00 condominium units are expected to be transferred in the second half.

For the first five months, 21,067 condo units were transferred, a 22% decline year-on-year.

Total residential transfers from January to May slumped 12% over the same period last year to 42,645 units.

In the second half, SCB will focus on condo mortgages, aiming at a 30% market share this year, up from 10% in the first half. "Amid the positive economic sentiment, competitive mortgage pricing will return," said Ms Pikun.

SCB targets expansion of its housing loan portfolio by 14.6% to 550 billion baht this year from 480 billion last year.

For the first half, its outstanding mortgages amounted to 520 billion baht.

SCB shares closed yesterday on the Stock Exchange of Thailand at 177 baht, down 2.50 baht, in trade worth 874 million baht.


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Source: Bangkok Post (Thailand)

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